When it comes to taxes, even small fish can get in big trouble for failing to file.

Fugitive technology executive Robert Beale has been making headlines since his recent capture in Florida, and Minnesota’s most famous tax protester has yet to declare an estimated $5.6 million in personal income with the Minnesota Department of Revenue or the IRS.

But Beale isn’t the only scofflaw who’s run afoul of the taxman. Consider the case of 51-year-old Michael J. Segal.

The former Apple Valley resident’s annual income is believed to be less than $20,000.

On Nov. 6, the Minnesota Department of Revenue issued a press statement announcing Segal had been charged with a gross misdemeanor in Dakota County District Court. He failed to file his personal income tax returns for four years.

From 2002 through 2005, Segal earned a total of $66,051, according to the Revenue Department.

Segal could owe as much as $3,500 in back taxes – or as little as nothing – depending on his deductions and exemptions. He faces a maximum of one year in prison and a fine of up to $3,000.

Segal’s $66,000 may look like small potatoes compared to Beale’s $5.6 million, but Mike Teegardin, a Revenue Department spokesman, said his office takes even modest cases seriously.

In the 12 months ending Oct. 1, the Revenue Department has sent notification letters to 21,359 nonfilers owing an average of $5,200 in taxes and penalties.

By state and federal law, single filers who earn more than a certain annual income are obligated to file taxes. The income threshold was $7,700 in 2002 and $8,200 in 2005.

Auditors also met in person this year with an additional 3,345 people owing an average of $10,000.

And every year, the state goes after a handful of wealthier offenders. Auditors contacted nine people who each owe more than $500,000.

Teegardin said it’s important to recoup as much as possible on behalf of the 3.6 million honest residents who file taxes each year in Minnesota.

Most cases, however, never result in criminal charges. And even when they do, the penalties may not be steep.

Eagan resident Lauren Bitzan pleaded guilty to seven counts of felony tax evasion in June, including four counts of failing to file individual tax returns for tax years 2000 (when he made $82,000) to 2003 and failure to remit $35,394 in corporate sales taxes. He was sentenced to four months in jail and 100 hours of community service.

It’s ultimately up to county prosecutors to determine whether there’s enough evidence to take nonfilers to court. This year, at least 20 people were charged with felony tax evasion in Minnesota, according to the Revenue Department.

Dakota County Attorney James Backstrom, for instance, said his office rarely receives referrals from the Revenue Department, and he has pursued charges in just 17 felony cases since 1990.

A lesser number of people are charged with gross misdemeanors every year, Teegardin said.

“If somebody has not filed, then we have an obligation to pursue that and present it, in this case, to the city attorney, and they make a determination,” Teegardin said.

Backstrom’s office reviewed Segal’s case in March but decided it did not rise to a felony.

Apple Valley City Attorney Michael Molenda said the Revenue Department had never referred a tax scofflaw to the city before Segal.

“This is the first one I’ve seen, and I’ve been doing this for almost 25 years,” Molenda said. “It must mean Apple Valley citizens are pretty good taxpayers.”

Molenda said he believed Segal to be “a musician of some sort.” Segal recently moved from Apple Valley and could not be reached for comment.

Frederick Melo can be reached at fmelo@pioneerpress.com or 651-228-2172.

Frederick Melo was once sued by a reader for $2 million but kept on writing. He came to the Pioneer Press in 2005 and brings a testy East Coast attitude to St. Paul beat reporting. He spent nearly six years covering crime in the Dakota County courts before switching focus to the St. Paul mayor's office, city council, and all things neighborhood-related, from the city's churches to its parks and light rail. A resident of Hamline-Midway, he is married to a Frogtown woman. He Tweets with manic intensity at @FrederickMelo.

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